Decision Making and Managing Change in Business

Introduction: Business Change in the Twenty-First Century

The business community of the twenty-first century is more dynamic than ever foreseen, and this is due to numerous forces belonging to both external and internal environments. The external forces are generally more responsible for generating change and could refer to any number of phenomena, including competitor strategies, shifting customer behavior, political changes (such as new tariff regulations or laws promoting recycling and pollution reduction), economic shifts, or technological developments. A particularly important source of change resides in the international context and materializes in the liberalization of markets and the globalization of the world's economies. These developments have raised living standards for populations worldwide, but they have also brought increased competition, higher quality standards for goods and services, more demanding customers, and new financial opportunities. All of these pressures impose on companies a constant need to develop and adapt to the requirements of the market.

External and Internal Forces Driving Change

Implementing change is often difficult to achieve, as it is a natural characteristic of individuals to be resistant to new things and to prefer what they are already accustomed to. Implementing change is even more difficult within organizations, which contain a variety of relatively rigid resources. Yet without change, a corporation is doomed to failure, as it will eventually cease to be competitive. With this in mind, company officials must make numerous decisions that ease the successful implementation of a change strategy. These decisions include properly identifying which organizational levels need to change, determining what features will be altered, and planning how those features will function in the future. Change may need to occur at multiple levels simultaneously, and it must be integrated in a way that fits both the corporate culture and the other resources within the firm.

A Case Study in Decision Making: The Automobile Manufacturer

To better understand how and why change occurs, as well as the mechanisms behind the decision-making process, consider the illustrative case of an automobile manufacturer. Suppose Company X produces large, luxurious vehicles for the American consumer. The external forces influencing its operations emerge at the international level and include a growing focus on preserving the natural environment, reducing resource consumption, and cutting pollution by lowering vehicle emissions. Within the same international context, Company X is threatened by Japanese manufacturer Y, which produces small, compact, and fuel-efficient vehicles. At the national level, the consumption patterns of the American population have also shifted: due to environmental concerns and rising gasoline prices, consumers now demand smaller, more fuel-efficient cars.

The combination of these forces creates a clear need for change. Once that need has been identified, the managers at Company X must make a series of concrete decisions. For instance, they will need to replace existing technologies with newer, more efficient alternatives. They will need to offer training programs to their staff. They will need to conduct market research and engage designers to identify the necessary features of a new vehicle line. Finally, they will need to allocate sufficient financial resources to implement these decisions. If the company does not already possess those resources, it may need to pursue downsizing operations to obtain them. Management must then find an appropriate way to communicate the decision to staff, secure employee support for the changes, and motivate remaining personnel to increase their efforts and help the organization achieve its overall goals.